Cuba’s Cienfuegos Refinery Reduced Production By Half Due to Cuts In Venezuelan Oil

14ymedio, Mario Penton and Nora Gamez Torres, Miami, 31 October 2016 –
Cuba's Cienfuegos refinery, operated by Cuvenpetrol SA, a
Cuban/Venezuelan joint venture, has been forced to cut production by
half due to cuts in shipments of crude oil from Venezuela, according to
comments made on Monday by an official of the Cuban Communist Party (PCC).

Plans to build a neighboring petrochemical complex with Venezuela's
participation are also on hold, said Lidia Esther Brunet, first
secretary of the Cienfuegos Provincial PCC.

The official admitted that the Camilo Cienfuegos refinery, a plant from
the Soviet era, will not meet its targets this year "as it had done
since its reactivation in 2007" and will process about 9.43 million
barrels of oil, just 53% of the plant's planned production. Brunet
attributed the causes to "contract issues, Venezuela and other
questions," as she explained to the Chinese news agency Xinhua.

"Right now it is not processing Venezuelan crude. Shipments decreased
substantially since last year," said a specialist at the refinery who
requested anonymity.

This month marks 16 years since the signing of the cooperation agreement
between Venezuela and Cuba under which oil is exchanged for Cuban
doctors and other services.

A worker at the refinery said the plant is refining crude oil from
Algeria. "The situation is unstable, we start again Sunday, but
sometimes it stops and restarts. We are all very afraid that in the end
we will be lout of work. It would be a tremendous blow," he said. The
plant has a payroll of 780 workers, according to official data from 2010.

"The managers are saying that the joint venture could be closed due to
the economic situation of Venezuela, and Cuba would wait for another
country to assume their 49% of the shares. The big problem is that the
refinery has never been profitable, because there were a number of
needed investments that were never made," said the refinery specialist,
adding that "there has not been a reduction in the workforce yet, but it
has already been announced. "

In July of this year,Luis Morillo,general manager in Cuba for the
Venezuelan state oil company PDVSZ, announced that the refinery would
partially shut down for 120 days in various periods of the year "for
maintenance."

"The statements confirm what was already announced. Cienfuegos is not
operating, but not because of technical problems, but because Venezuela
does not have enough crude oil to send to refineries in Cuba. It is not
about Cienfuegos, but about Venezuela," said Jorge Piñón, acting
director of the Center for International Energy and Environmental Policy
at the University of Texas at Austin.

The expert, who monitors the movement of tankers in the Caribbean, said
that in the last three or four months "there has been almost no traffic
to Cienfuegos."

The refinery's expansion plans included increasing oil processing
capacity to 150,000 barrels per day, the construction of a plant for
olefin and aromatics, expanded storage capacity, and reactivating the
pipeline between Matanzas and Cienfuegos.

According to Piñón the impact of the decrease in oil supply from
Venezuela has not been even greater because the country continues to
import oil from other sources, which comes in primarily to the port of
Matanzas.

On Monday, Foreign Trade Minister Rodrigo Malmierca, admitted that the
Cuban economy, severely hit by the crisis in Venezuela, would not grow
even the 1% expected.

Starting in the second half of this year, the government announced cuts
in fuel and electricity consumption, mainly in state enterprises. Under
this plan, the central government assigns each company a monthly
allocation of kilowatts of electricity. If the company exhausts its
quota before the end of the month, their supply is cut off and workers
go home "on vacation."

The authorities have also cut public lighting and the distribution of
fuel to companies, a part of which was diverted to the black market for
private transport, the prices of which have risen as a result of this
decision.

During a televised speech in July, President Raul Castro confirmed the
decline in oil shipments from Venezuela. According to Reuters, citing
internal PDVSA data, Venezuela supplies fell 40% in the first half of
2016. Jorge Piñón, the expert from the University of Texas, estimated
that the reduction is 25% since the beginning of this year. The
government has no recent statistics on the total refinement and
extraction of domestic oil.